Sanlam lines up nearly $200 million for acquisitions

Sanlam has nearly $200 million lined up for acquisitions, it said on Thursday, as South Africa's largest insurer looks for new streams of income to offset slowing growth at home.

Insurers in Africa's most advanced economy are struggling to sell insurance at a faster rate as job losses sweep across the country's mining and manufacturing industry.

In response, Sanlam, along with rivals, has been bulking up its presence in Africa, where rapid economic growth has increased the number of people with money to spend on insurance to protect their wealth.

"With that R2.5 billion discretionary capital, we will continue to find growth opportunities primarily in the emerging market territories," said Sanlam Chief Executive Ian Kirk, adding that most of the money would be spent elsewhere in Africa.

Sanlam, which operates in several African countries including oil-rich Ghana and Africa's biggest economy Nigeria and in India and Malaysia, is in talks about an acquisition in Angola, the head of the company's emerging markets unit told Reuters last week.

Sanlam said diluted headline earnings grew 6 percent to 233.1 cents per share in the six months to the end of June, a slowdown from a year a go as weak commodity prices hit businesses in Ghana and Zambia.

Headline EPS is the main profit measure in South Africa that strips out certain one-off items.

Shares in Sanlam, which are trading at about a 21 percent premium with a 12.6 times forward price to earnings ratio, fell 3.2 percent to 60.60 rand, extending losses so far this year to more than 14 percent.

Sanlam, which reported nearly a one-third rise in half-year profit the same time a year ago, said the results were also weighed down by weak equity markets and diminishing disposable income at its mainstay South African market.

"The South African economy continues to struggle with a modest growth outlook of below 2 percent for 2015," Sanlam said in a statement.

"Disposable income remains under pressure from a combination of high exposure to debt and inflationary strain, in particular large hikes in electricity prices."

- Reuters